SEPTEMBER 6, 2017 - Trian Partners
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SEPTEMBER 6, 2017 © 2017 Trian Fund Management, L.P. All rights reserved.
Disclosure Statement and Disclaimers Additional Information Trian Fund Management, L.P. (“Trian”) and certain of the funds and investment vehicles it manages (collectively, Trian with such funds and investment vehicles, “Trian Partners”), together with other participants (collectively, the “Participants”) identified in the definitive proxy statement (the “Proxy Statement”) filed by Trian Partners and the other Participants on Schedule 14A with the Securities and Exchange Commission (the “SEC”) on July 31, 2017, are participants in the solicitation of proxies made in connection with the 2017 annual meeting of shareholders of The Procter & Gamble Company (the “Company”), including any adjournments or postponements thereof or any special meeting that may be called in lieu thereof (the “2017 Annual Meeting”). Shareholders are advised to read the Proxy Statement, accompanying proxy card and any other documents related to the solicitation of shareholders of the Company in connection with the 2017 Annual Meeting because they contain important information, including additional information relating to the Participants as well as a description of their direct or indirect interests by security holdings. These materials and other materials filed by Trian Partners and the other Participants in connection with the solicitation of proxies are available at no charge at the SEC’s website at www.sec.gov. The Proxy Statement and other relevant documents filed by Trian Partners and the other Participants with the SEC are also available, without charge, by directing a request to Trian Partners’ proxy solicitor, Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, New York 10022 (shareholders call toll-free: 877-750-8338; banks and brokers call collect: 212-750-5833; or email: material@innisfreema.com (Requests for materials only)). General Considerations This presentation is for general informational purposes only, is not complete and does not constitute an agreement, offer, a solicitation of an offer, or any advice or recommendation to enter into or conclude any transaction or confirmation thereof (whether on the terms shown herein or otherwise). This presentation should not be construed as legal, tax, investment, financial or other advice. The views expressed in this presentation represent the opinions of Trian Partners and are based on publicly available information with respect to the Company and the other companies referred to herein. Trian Partners recognizes that there may be confidential information in the possession of the companies discussed in this presentation that could lead such companies to disagree with Trian Partners’ conclusions. Certain financial information and data used herein have been derived or obtained from filings made with the SEC or other regulatory authorities and from other third party reports. Trian Partners has not sought or obtained consent from any third party (other than the individuals who have provided the testimonials included in this presentation) to use any statements or information indicated herein as having been obtained or derived from statements made or published by third parties, nor has it paid for any such statements. Any such statements or information should not be viewed as indicating the support of such third party for the views expressed herein. Trian Partners does not endorse third-party estimates or research which are used in this presentation solely for illustrative purposes. No representation or warranty, express or implied, is made that data or information, whether derived or obtained from filings made with the SEC or any other regulatory agency or from any third party, are accurate. Past performance is not an indication of future results. Neither the Participants nor any of their affiliates shall be responsible or have any liability for any misinformation contained in any statement by any third party or in any SEC or other regulatory filing or third party report. Unless otherwise indicated, the figures presented in this presentation have not been calculated using generally accepted accounting principles (“GAAP”) and have not been audited by independent accountants. Such figures may vary from GAAP accounting in material respects and there can be no assurance that the unrealized values reflected in this presentation will be realized. There is no assurance or guarantee with respect to the prices at which any securities of the Company will trade, and such securities may not trade at prices that may be implied herein. The estimates, projections, pro forma information and potential impact of the opportunities identified by Trian Partners herein are based on assumptions that Trian Partners believes to be reasonable as of the date of this presentation, but there can be no assurance or guarantee that actual results or performance of the Company will not differ, and such differences may be material. This presentation does not recommend the purchase or sale of any security. Trian Partners reserves the right to change any of its opinions expressed herein at any time as it deems appropriate. Trian Partners disclaims any obligation to update the data, information or opinions contained in this presentation. -1-
Disclosure Statement and Disclaimers
Forward-Looking Statements
This presentation contains forward-looking statements. All statements contained in this presentation that are not clearly historical in nature or that
necessarily depend on future events are forward-looking, and the words “anticipate,” “believe,” “expect,” “potential,” “could,” “opportunity,”
“estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. The projected results and statements
contained in this presentation that are not historical facts are based on current expectations, speak only as of the date of this presentation and
involve risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by such projected results and statements. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are
difficult or impossible to predict accurately and many of which are beyond the control of Trian Partners. Although Trian Partners believes that the
assumptions underlying the projected results or forward-looking statements are reasonable as of the date of this presentation, any of the
assumptions could be inaccurate and therefore, there can be no assurance that the projected results or forward-looking statements included in this
presentation will prove to be accurate and therefore actual results could differ materially from those set forth in, contemplated by, or underlying
those forward-looking statements. In light of the significant uncertainties inherent in the projected results and forward-looking statements included in
this presentation, the inclusion of such information should not be regarded as a representation as to future results or that the objectives and
strategic initiatives expressed or implied by such projected results and forward-looking statements will be achieved. Trian Partners will not
undertake and specifically disclaims any obligation to disclose the results of any revisions that may be made to any projected results or forward-
looking statements in this presentation to reflect events or circumstances after the date of such projected results or statements or to reflect the
occurrence of anticipated or unanticipated events.
Not an Offer to Sell or a Solicitation of an Offer to Buy
Under no circumstances is this presentation intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy any
security. Funds and investment vehicles managed by Trian currently beneficially own shares of the Company. These funds and investment vehicles
are in the business of trading – buying and selling– securities and intend to continue trading in the securities of the Company. You should assume
such funds and investment vehicles will from time to time sell all or a portion of their holdings of the Company in open market transactions or
otherwise, buy additional shares (in open market or privately negotiated transactions or otherwise), or trade in options, puts, calls, swaps or other
derivative instruments relating to such shares. Consequently, Trian Partners’ beneficial ownership of shares of, and/or economic interest in, the
Company‘s common stock may vary over time depending on various factors, with or without regard to Trian Partners’ views of the Company’s
business, prospects or valuation (including the market price of the Company’s common stock), including without limitation, other investment
opportunities available to Trian Partners, concentration of positions in the portfolios managed by Trian, conditions in the securities markets and
general economic and industry conditions. Trian Partners also reserves the right to change its intentions with respect to its investments in the
Company and take any actions with respect to investments in the Company as it may deem appropriate, and disclaims any obligation to notify the
market or any other party of any such changes or actions. However, neither Trian Partners nor the other Participants or any of their respective
affiliates has any intention, either alone or in concert with another person, to acquire or exercise control of the Company or any of its subsidiaries.
Concerning Intellectual Property
All registered or unregistered service marks, trademarks and trade names referred to in this presentation are the property of their respective
owners, and Trian Partners’ use herein does not imply an affiliation with, or endorsement by, the owners of these service marks, trademarks and
trade names or the goods and services sold or offered by such owners.
-2-Revitalize P&G – Together
Why Does P&G Need Change?
Despite 10 years of turnaround strategies and portfolio changes, we believe P&G still suffers from:
Market share erosion and low organic sales growth
Aging brands and a lack of breakthrough innovation
Suffocating bureaucracy and excessive costs which create structural drags on the business
Board complacency about, and rewarding management for, continued underperformance
Weak corporate governance which entrenches existing problems
Shareholder returns less than half that of peers’ over a decade; bottom quartile over most recent time frames
Short-term thinking (selling businesses vs. fixing businesses, cutting ad spend last quarter, etc.) that doesn’t
address the root causes of P&G’s challenges
What are Trian’s Strategic Initiatives?
Nelson Peltz will work constructively with the Board to help P&G REGAIN LOST MARKET SHARE by:
Organizing P&G in a way that promotes accountability, faster decisions & responsiveness to local preferences
Ensuring management’s $12-$13bn “productivity plan” ACTUALLY delivers volume generating reinvestment
Fixing the innovation machine
Improving development of small, mid-size & local brands; both organically and through M&A
Winning in digital
Addressing P&G’s insular culture
Improving corporate governance, including aligning management compensation with market share gains
Trian Consumer Investments where Nelson Peltz served on the Board have(1):
1) Grown earnings per share (“EPS”) +780 basis points (“bps”) faster than the S&P 500 annually; and
2) Achieved total shareholder returns (“TSR”) of +880bps greater than the S&P 500 annually
(1) Please see page 88 of this presentation, including the footnotes, for additional information. -3-What We Are NOT Recommending
Trian’s objective is to create sustainable long-term value at P&G.
Trian is:
NOT advocating for the break-up of the Company
NOT suggesting that the CEO be replaced
NOT seeking to replace any Directors
NOT advocating taking on excessive leverage
NOT seeking to cut pension benefits
NOT suggesting that research & development, marketing
expense or capital expenditures be reduced
NOT seeking cost cuts that could impact product quality
NOT suggesting the Company move out of Cincinnati
If elected, Nelson’s first action as a P&G Director would be to recommend that the Board
reappoint the P&G nominee who was not re-elected
-4-Why Adding a Shareholder Voice to the Boardroom is Critical
The Company’s Spin
“You are being asked to choose between a Board and management team that are successfully
executing a proven plan to build a better and more valuable company, and Mr. Peltz”
– David Taylor, CEO, August 14, 2017
The Reality
Shareholders are deciding whether to elect Nelson Peltz to the existing Board so that, as a Director, he can have full
transparency into what is causing P&G’s consistent underperformance
– P&G shareholders are NOT choosing between P&G’s existing Board/management team, and Nelson Peltz.
Neither Trian nor Nelson Peltz have suggested that the CEO be replaced and they are NOT seeking to replace
any existing Directors
– Currently our analysis is all done from the outside. We are dependent on the Company’s public disclosures,
which are not fully transparent. In many cases, the Company’s public statements seemingly contradict what we
have learned through our due diligence, including our conversations with recently retired senior executives of
P&G
– In the coming weeks, we imagine that P&G’s army of advisors may try to spin, deflect, and mislead, because they
do not want shareholders to focus on P&G’s decade-long history of underperformance. They may criticize
Nelson’s intentions and track record, as they already have attempted to do (in highly misleading ways)
– It is critical that shareholders cut through the noise. Trian is asking that Nelson become 1 of 11 (or 12) on the
Board. While we believe that the initiatives that we have laid out in this presentation will help revitalize P&G,
executing them will require Nelson to obtain the support of a majority of the Board
– It is also important to know Nelson is open-minded to superior ideas and to “course correcting” if there is new
information that requires it
Source: SEC filings. -5-P&G Faces Numerous Challenges
P&G faces several challenges, but the greatest has been market share loss
P&G has lost significant share to traditional peers(1)
Moreover, all traditional Consumer Packaged Goods (“CPG”) companies must be concerned with new
competitive threats:
► Consumer preference is fragmenting, ► Digital ecosystem has leveled playing field, diminishing
with preference for small & local “moat” of owning shelf space at mass retailers
► Consumers used to trust big brands; ► Hyper-growth of natural, organic & wellness
many millennials now distrust big brands and
seek out purpose led brands
P&G Is Losing Share to Large Traditional Peers… …And Traditional Peers Are Losing Share
(Cumulative Organic Sales Growth) to New Small, Mid-Size & Local Brands
FY 2011 – 2017(2) FY 2015 – 2017(2)
28% Smaller CPG companies are growing ~3x
7%
22% 6% faster than large ones in the U.S. (3)
14%
3%
Local brands are growing 2x faster than their
multi-national counterparts (4)
(1) (1)
Peers Market Peers Market
Growth Growth
(1) See page 18 of this presentation for details on P&G’s peer group. Unless otherwise noted, we have adjusted peers’ results to match P&G’s June fiscal year end.
(2) Source: SEC filings, company filings and Wall Street research.
(3) IRI and Boston Consulting Group study of 400 CPG companies; March 6, 2016. Smaller CPG companies defined as those with salesTrian’s Strategic Initiatives: Regain Lost Market Share Through
The Following Initiatives
– We believe P&G’s current “matrix” structure results in limited accountability
– Selling & Market Operations (SMOs) sit outside the Global Business Units (GBUs),
creating three dimensions to P&G’s matrix structure – GBUs, SMOs and Corporate
Functions / Global Business Services (GBS)
Organize P&G – Corporate Functions and GBS report to Corporate, not the GBUs; resources within
in Way That those organizations often have dual-line reporting
1 Promotes – We believe P&G should be organized as three standalone GBUs under a lean holding company:
1) Beauty, Grooming & Health Care ($26bn sales)
Accountability 2) Fabric & Home Care ($21bn sales)
3) Baby, Feminine & Family Care ($18bn sales)
– Each GBU will have regional leaders with full and clear profit & loss (“P&L”) ownership
– Benefits vs. current matrix: accountability, faster decisions & responsiveness to local preferences
– Management lacks credibility on costs: two “productivity plans” announced since 2012 total
Ensure $23bn, or 33% of net sales…appears unrealistic
Management’s – The first $10 billion productivity plan from 2012 plan did not deliver results; operating profit
2 $12-$13bn was flat and market share losses continued
“Productivity Plan” – Management acknowledges there is up to $12-$13bn of additional cost savings opportunity,(1)
Delivers Results yet P&G’s long-term compensation plan targets market share loss and bottom-quartile EPS
growth through 2019(2)
– P&G hasn’t created a new leading brand in nearly 20 years, while innovation for legacy
brands has not stemmed market share losses. This is despite spending more on research and
development (“R&D”) than Henkel, Kimberly-Clark, Colgate-Palmolive, Beiersdorf, Reckitt
3 Fix The Innovation Benckiser, Clorox, Church & Dwight, and Edgewell Personal Care, combined(3)
Machine
– Nelson Peltz will propose a Board-led study to understand why the innovation machine is
broken. He will not propose cutting R&D; rather to regain share, P&G must again become
best-in-class at both new product/brand development and upgrading existing products/brands
– P&G doubled-down on its large and global brands just as the world went smaller / more
Develop Small,
local(4)
4 Mid-Size & Local
– P&G’s structure and culture must adapt to manage and develop high-growth small, mid-size
Brands & local brands that delight the consumer in a way that the big brands cannot
(1) Company transcript from Deutsche Bank Global Consumer Conference held on June 15, 2017. (2) See page 14 of this presentation. Throughout this presentation, P&G’s Performance
Stock Program is referred to as the company’s long-term compensation plan. (3) See page 56 of this presentation. (4) See page 60 of this presentation. -7-Trian’s Strategic Initiatives: Regain Lost Market Share Through
The Following Initiatives
Make M&A a – P&G must acknowledge that others will inevitably come up with new ideas, new
Growth Strategy opportunities for growth and new products that are on-trend with consumers
5 and a Core – P&G must be proficient at acquiring small, mid-size & local brands and using its R&D and
Competency marketing clout to take them to the next level
– Small, mid-size & local brands are now better able to utilize the digital ecosystem (social
media, digital advertising, and online channels) to level the playing field with P&G
6 Win In Digital
– P&G must “up its game” and develop a decisive digital strategy by category (in areas of
social media, digital advertising, direct-to-consumer, subscription services, big data)
– Increase the mix of external talent, including senior operating roles
– David Taylor told Nelson that “We cannot bring in outside people at too senior a level or
Address Insular they will fail”(1)
7
Culture – We are committed to work with David Taylor but future succession planning must be
enhanced by giving proper consideration to external candidates, from CEO down
through the ranks
– We believe P&G’s current Board has not delivered for shareholders:
– 9 out of 10 independent Directors saw P&G’s stock significantly underperform
peers on their watch (average/median tenure of approximately 9 years)
– 3 CEO changes in 8 years; all were career P&G employees (half the Board
Improve oversaw all 3 transitions)(2)
8 Corporate – Nelson will look to make P&G best-in-class from a corporate governance perspective:
– Nelson will add significant CPG experience to the Board (almost no CPG
Governance experience among independent Directors today)
– Fix compensation: Historically, management bonus payouts were high despite
significant underperformance.
– Currently, management will potentially be rewarded for losing market share and
bottom quartile EPS growth under the long-term compensation plan
(1) April 24, 2017 meeting.
(2) See pages 9 and 82 of this presentation. -8-P&G Has Underperformed Under this Board’s Watch, Yet It Claims
Unequivocally that Nelson Peltz Would Not Add Value
“Adding Nelson Peltz of Trian on our Board has the potential to derail the transformation we’re leading at P&G… P&G
has a diverse and experienced Board that is actively overseeing our transformation and will continue to be agents of
change to improve P&G’s global performance.” – David Taylor, August 1, 2017
Most of the Company’s independent Directors have been on the Board for at least 8 years (average/median tenure of
approximately 9 years), and rather than being “agents of change,” they have overseen the Company at a time during
which it has significantly underperformed its peers
We therefore find it disappointing that the Board rejected adding Nelson as a Director and has concluded that he
would somehow “derail” the Company’s transformation by bringing a fresh perspective as one member of an 11 (or
12) person Board
Trian has confirmed that NONE of the 13 CEOs or Chairs of the boards on which Nelson has served were contacted by
P&G for a reference as of mid-August 2017 (several months after P&G turned down his request for a Board seat)
P&G TSR Peers TSR
P&G Director Tenure (yrs) During Tenure During Tenure(2) Difference
Scott Cook 17 342% 689% (346%)
Ernesto Zedillo 16 305% 586% (281%)
James McNerney 14 192% 495% (303%)
Patricia Woertz 9 65% 191% (126%)
Kenneth Chenault 9 75% 220% (145%)
Angela Braly 8 83% 192% (108%)
Meg Whitman 6 69% 160% (91%)
Terry Lundgren 4 50% 91% (41%)
Francis Blake 2 13% 29% (16%)
Amy Chang(1) 0 1% 0% 1%
Source: Bloomberg, SEC filings. TSR from date each Director joined the Board through 6/15/2017, one day before rumors surfaced of Trian seeking P&G Board representation.
(1) Joined the board on 6/1/2017. TSR represents a 2 week period from 6/1/2017-6/15/2017.
(2) Please see page 18 for a list of peers used throughout this presentation. -9-P&G Touts Its TSR Since David Taylor Became CEO But Results
Must Be Taken in Context
TSR Under David Taylor P&G’s TSR of 24% since David Taylor took over as CEO
(11/1/2015 – 6/15/2017) is 2% higher than the peer average, but he took over after
a one-year period where P&G underperformed peers by
31%
ULVR 55%
HEN 31% David Taylor took over at a time when P&G’s share
price had just suffered meaningfully. We believe it is
RB 29% disingenuous to ignore the following:
CHD 28% ‒ P&G had a -10% TSR during the 1 year prior to
David Taylor’s start as CEO, at the tail-end of 31% P&G
PG 24%
2% P&G out- A.G. Lafley’s tenure under-
performance
performance
PeerAvg.
Peer Avg. 22% 1-year prior
‒ Peers had a +21% TSR during the 1 year prior
S&P
S&P 500
500 22% to David Taylor’s start as CEO
CLX 20% ‒ P&G’s share price declined 4%, alone, on the day
of its final earnings announcement before Mr.
CL 20% Taylor’s appointment, as shareholders were
disappointed with results and the guidance for the
Consumer
XLP 19% following year
Staples
LOR 18% ‒ As a result of that frustration, P&G’s P/E multiple
was 18% lower than peers in November 2015
KMB 15%
BEI 13% Approximately half of P&G’s TSR in the chart on the
left has occurred since Trian invested in P&G(1)
EPC(10%)
Source:Capital IQ. TSR measured through June 15, 2017, one day before rumors surfaced of Trian seeking Board representation.
Note: TSR calculated as if an investor had purchased 1 share of stock on the first day of the measured period and thus it includes the pro rata return of any spun-off segments (if relevant).
(1) Since Trian’s first investment in P&G occurring November 10, 2016. - 10 -Underlying Business Performance Has Not Improved Under David Taylor
P&G’s organic sales growth under David Taylor (FY15 – FY17) is less than that of prior years, and
is half the peer average over the same time frame(1)
Annual EPS growth under David Taylor is eight percentage points lower than the peer average
Despite claiming a “New Standard of Excellence” under David Taylor, management’s long-term
compensation plan targets continued market share losses and bottom quartile EPS growth
through 2019
Annual Organic Sales Growth Annual EPS Growth
Before David Taylor Since David Taylor Before David Taylor Since David Taylor
(FY11 – FY15) (FY15 – FY17) (FY11 – FY15) (FY15 – FY17)
4.1% 7.8% 6.6%
150bps annual Market
2.7% under- 3.0% Growth: 3.5%
performance per P&G mgmt. 790bps annual
under-
performance
1.5%
0.4%
(1.3%)
P&G Peer Average P&G Peer Average P&G Peer Average P&G Peer Average
Source: SEC filings, presentations, and investor calls. We have adjusted peers’ results to match P&G’s June fiscal year end.
(1) Subject only to the adjustments described on page 18 of this presentation, all references to P&G’s EPS in this presentation refer to “Core EPS” and reflect the methodology used by P&G for
calculating Core EPS. - 11 -In 2017, Share Loss and Earnings Underperformance Continued,
Despite P&G’s Claims
P&G once again lost market share in FY 2017 (5 out of 5 segments lost market share)
EPS growth of 7% was in the bottom third of its peer group (peer average of 11%)
Adjusted for the share count reductions from the Coty & Duracell proceeds and the
advertising spend cut of $125mm (vs. guidance for mid-single digit increase in spend),
EPS was up only 2%
2017 Organic Sales Growth 2017 Core EPS Growth
5% of the 7% EPS growth was
driven by 1) share buybacks from
3% the proceeds of the Coty and 11%
Duracell transactions and 2)
reduced advertising spend
2% 2.1%
7%
2017A 2017 Peer Avg. 2017 Market 2017A 2017 Peer Avg.
Note: 2017 market growth per P&G
management commentary
Source: SEC filings, presentations, and investor calls. We have adjusted peers’ results to match P&G’s June fiscal year end. - 12 -P&G Also Cut Advertising Spend in 2017 – Breaking a Cardinal Rule
P&G originally committed to grow advertising spend in 2017:
“…We’re committed to four quarters of brand support. The fourth quarter we increased meaningfully our
media investment versus previous year and we’re going to continue that in FY17” – Q4 ‘16 Earnings Call
In reality, P&G cut advertising spend by $125mm in 2017. Those ad savings should have been
reinvested in other forms of brand building to regain lost market share. Instead, management
chose not to reinvest, in our view benefitting near term earnings at the expense of long-term growth
2017 Advertising Spend Q4 2017 Advertising Spend(1)
$125mm Est. $115mm
$7,243 benefit to $1,811
benefit to
$7,118 operating profit
$1,696 operating profit
in 2017 in Q4 ’17
~50% of the
EPS beat vs.
Q4 consensus
2016 2017 2016 2017
% of Sales 11.1% 10.9% -20 bps 11.2% 10.5% -70 bps
Meanwhile, peers have increased investment in digital advertising:
“We've stepped up digital [advertising]. Why? Because it's working, and we're getting the
returns, and we can see the returns both in volume and in sales and importantly, in terms of
profit.” – August 2017
Source: SEC filings, earnings transcripts.
(1) Estimated based on disclosure from the Q4 2017 earnings press release and Trian analysis. - 13 -Management is Being Paid For, And the Board Accepts, Mediocrity
Most recent 3-year long-term compensation targets (covering 7/1/16-6/30/19)
pay management for market share losses and bottom quartile EPS growth
Targeting 2.8% organic sales growth from 2016-2019
– LOWER than expected market growth suggesting
management is being paid in full for market share loss
Sales Targets
“Our markets today are growing somewhere between 3%
and 3.5%. We want to do a bit better than that
consistently” – David Taylor, P&G 2016 Analyst Day,
November 18, 2016
Targeting 6.0% EPS growth from 2016-2019
EPS Targets Translates to bottom quartile EPS growth vs. peers, based
on consensus estimates for 2016-2019(1)
Compensation plan reflects P&G’s insular culture
• As of 2017, not a single element of P&G’s long-term compensation plan disclosed
in the proxy statement measures performance RELATIVE to peers(2)
• Low Targets Weak Performance Lower Targets
Source: Company proxy statement, Capital IQ.
(1) Consensus estimates from Capital IQ as of June 30, 2016.
(2) According to the Company’s 2017 proxy statement, P&G’s 2017 long-term incentive plan consisted of a grant of time-vested options, time-vested restricted stock units and
performance stock units that vest based on P&G’s achievement of four different absolute targets (regardless of P&G performance versus peers). - 14 -Consumer Companies with Nelson on the Board Have Consistently
Outperformed P&G
P&G Spin
“Since the CEO transition on November 1, 2015, our team has delivered total shareholder return (“TSR”) of 27%...the
weighted average return of the companies where Mr. Peltz serves as a Board member has been only 8%”
– Letter From David Taylor to Shareholders, 8/14/17
Reality
Companies where Nelson serves as a director have meaningfully higher TSR than P&G’s. Mr. Taylor’s letter and
methodology are highly misleading for the following reasons:
1) Arbitrary Time Frame: Why is David Taylor’s tenure the right time frame for evaluating companies Nelson has been
involved with? Wouldn’t it be far more logical to look at the time frame that Nelson has been involved at those companies?
2) “Market Value Weighted Average” TSR Methodology: P&G uses a market value weighted TSR metric to measure
Nelson’s performance. This methodology is inherently misleading. For example, P&G’s methodology weights Mondelēz’s
TSR performance at ~30x that of Wendy’s, based on relative market values! What’s more, P&G uses a simple average as
opposed to a weighted average to measure its own peers’ performance, making its results look more favorable
3) P&G Has Underperformed Under This Board’s Watch: The reality is that a significant majority of P&G's directors have
seen the Company underperform both the S&P 500 and peers since they were appointed
The following table shows performance during Trian’s ENTIRE involvement with each company. TSR at each of
these companies has outperformed P&G – by 10% annually on average – since Trian invested
Trian Consumer Investments with Nelson Peltz on the Board
Company TSR
TSR during Trian's TSR: Company TSR vs. PG TSR - On
Investment Same Time Frame vs. PG TSR an Annual Basis
Sysco 58% 22% +36% +15%
Mondelez 241% 93% +148% +6%
Wendy's 465% 125% +341% +9%
Heinz 177% 61% +117% +8%
Annual Outperformance vs. P&G +10%
Source: Bloomberg. TSR calculated from date of Trian investment through the earlier of 6/15/2017 (one day
before rumors surfaced of Trian seeking Board representation), or the last day that the company's shares were
publicly traded. - 15 -Trian Has Developed Strong Relationships with Company Boards
and Management Teams Following Prior Proxy Contests
Trian has been involved in three proxy contests in its history:
– (i) Heinz in 2006; (ii) DuPont in 2015; and (iii) P&G in 2017
In all three, we heard substantially the same rhetoric from the companies and their advisors prior to
the proxy contest. However, at Heinz and DuPont, management’s views of Trian and Nelson Peltz
changed dramatically after we began to work with them to enhance shareholder value
– We have since developed strong and positive relationships with both boards and
management teams
“[P&G] is in the best position to
“The company is at a key continue building a better
“Trian has chosen this path [a
inflection point and we cannot Company without adding Mr. Peltz
proxy contest] with the potential to
afford to let the Board and to the Board...Now is the time to
PRIOR to management be diverted from our
disrupt our Company at a key
focus on accelerating results, and
stage of execution against our
Vote progress and plan by creating a
plan” – DuPont Press Release,
prevent anything from derailing the
dysfunctional and destabilizing work that is delivering
Jan 2015
environment.” – Heinz, June 2006 improvement.” – David Taylor,
August 1, 2017
“I said to another CEO…who had “I have the highest regard for Nelson
called me and inquired about Peltz and Ed Garden. Since
Nelson, that if I were to form the becoming CEO of DuPont, I have
board today, Nelson would be one talked many times with the Trian team
AFTER Trian
Involvement
of the first Directors I’d ask to serve
because he is an insightful,
and appreciate their insights on
strategy and operations, as well as
?
communicative, enthusiastic, the collaborative and productive
energetic and available Director.“” – manner in which they have engaged
Bill Johnson, Heinz CEO, Mar 2008 with us.” – Ed Breen, DuPont CEO,
July 2017
Source: SEC filings and press releases. - 16 -Revitalize P&G – Together
I. A Record of Underperformance
II. Trian Strategic Initiatives: Regain Lost Market Share
a. Organize in Way That Promotes Accountability
b. Ensure Management’s $12-$13bn “Productivity Plan” Delivers Results
c. Fix The Innovation Machine
d. Develop Small, Mid-Size & Local Brands
e. Make M&A a Growth Strategy and a Core Competency
f. Win in Digital
g. Address Insular Culture
h. Improve Corporate Governance
III. Appendix: Trian Overview
- 17 -Context on Key Assumptions, Peer Group & Time Frames
P&G peer group
We believe the relevant peer group is comprised of companies domiciled in the U.S. and Europe larger than
US$4bn in market capitalization that generate at least half of their sales in similar health and personal care
categories
Throughout this presentation, we use the following companies as peers: Beiersdorf, Church & Dwight, Clorox,
Colgate-Palmolive, Edgewell Personal Care, Henkel, Kimberly-Clark, L’Oreal, Reckitt Benckiser and Unilever
Relevant time frame to measure performance
We measure total shareholder returns over 1, 2, 3, 4, 5 and 10-year periods to highlight shorter term and longer
term underperformance through June 15, 2017, one day before rumors surfaced of Trian seeking Board
representation.(1) We also show TSR during David Taylor’s tenure on page 10
We measure business performance over the last 6 years from fiscal year 2011 through fiscal year 2017. We
believe this time frame is most relevant as fiscal year 2011 represents one year prior to the launch of P&G’s 5-
year, $10 billion productivity program, which was meant to drive both stronger earnings growth and organic sales
growth via reinvestment. P&G’s future results are largely contingent on a new $12-13 billion productivity program
beginning in fiscal year 2017 that will last through 2021
Unless otherwise noted, we have adjusted peers’ results to match P&G’s June fiscal year end
For market share data from third party sources where only annual data is available, we measure performance
through December 2016
Core EPS growth and the impact of recent divestitures
P&G often presents Core EPS on a continuing operations basis, which backs out the earnings from recently
divested businesses in historical periods. This methodology would restate FY 2011 Core EPS from $3.95 (as
reported) to ~$3.48
However, we believe that Core EPS growth should be measured from FY 2011 as originally reported ($3.95) to
compare real earnings power of one share of P&G at the beginning and end of this time frame. P&G is comparing
apples and oranges by subtracting earnings of discontinued operations for historical periods while showing a
benefit from share count reduction or cash proceeds from the sale or exchange of such divested businesses (e.g.,
Duracell and Coty)
(1) P&G’s stock outperformed the Consumer Staples Select Sector SPDR Fund by 130bps that day. - 18 -TSR Has Trailed the Vast Majority of Peers
TSR – 10-Year TSR – 5-Year TSR – 4-Year
CHD 402% RB 175% RB 97%
RB 289% HE 162% CHD 86%
HE 278% UL 141% UL 85%
UL 276% LO 126% CLX 84%
Peer Avg. 210% CLX 123% HE 78%
CLX 195% CHD 120% Peer Avg. 67%
CL 189% Peer Avg. 118% S&P 64%
KMB 174% S&P 102% LO 62%
Consumer Consumer
171% BE 93% 56%
Staples Staples
Consumer
LO 155% 90% KMB 54%
Staples
BE 101% KMB 89% BE 49%
S&P 97% EPC 84% CL 42%
PG 93% CL 68% EPC 34%
EPC 39% PG 67% PG 30%
Source: Capital IQ. TSR measured through June 15, 2017, one day before rumors surfaced of Trian seeking Board representation.
Note: TSR calculated as if an investor had purchased one share of stock on the first day of the measured period and thus it includes the pro rata return of any spun-off segments (if relevant).
“Consumer Staples” is represented by The Consumer Staples Select Sector SPDR Fund (XLP). - 19 -TSR Has Trailed the Vast Majority of Peers (Cont’d)
TSR – 3-Year TSR – 2-Year TSR – 1-Year
UL 76% UL 63% UL 42%
RB 69% RB 47% HE 26%
CLX 69% CLX 41% BE 22%
CHD 62% CHD 34% S&P 21%
LO 55% KMB 31% RB 20%
HE 55% Peer Avg. 31% LO 19%
Consumer
Peer Avg. 48% 27% Peer Avg. 15%
Staples
Consumer
39% BE 26% PG 11%
Staples
S&P 35% HE 24% CHD 10%
Consumer
BE 34% S&P 23% 10%
Staples
KMB 32% CL 22% CL 9%
PG 23% PG 22% CLX 9%
CL 20% LO 20% KMB 2%
EPC 11% EPC (3%) EPC (5%)
Source: Capital IQ. TSR measured through June 15, 2017, one day before rumors surfaced of Trian seeking Board representation.
Note: TSR calculated as if an investor had purchased one share of stock on the first day of the measured period and thus it includes the pro rata return of any spun-off segments (if relevant).
“Consumer Staples” is represented by The Consumer Staples Select Sector SPDR Fund (XLP). - 20 -Organic Sales Growth Has Underperformed Peers
P&G’s organic sales growth has deteriorated over time…
Organic Sales Growth CAGR (FY 2011 – FY 2017): 2.3%
4%
3% 3% 3%
2% 2%
1%
2006-2011 2012 2013 2014 2015 2016 2017
CAGR
And has significantly underperformed the peer group since 2011
6.3%
Organic Sales Growth CAGR (FY 2011 – FY 2017):
Peer Avg: 3.7%
4.9%
4.3% 4.2%
3.7% 3.5% 3.5% 3.4%
3.6%
2.3%
(0.2%)
UL CL BEI RB HE CHD LC KMB CLX PG EPC
(ex-Pet (Consumer (ex-
(ex-Food) (Consumer) (ex-Adhesive) Products) Professional)
Nutrition)
Source: SEC filings and annual reports.
Note: Clorox figures exclude M&A based on Trian’s estimates. Reckitt Benckiser and Beiersdorf 2017 figures exclude one-time impacts as disclosed by the companies. - 21 -Volume Growth Continues to Trail Peers
Indexed Organic Volume Growth: FY 2011 – FY 2017
Average Volume Growth During
David Taylor's Tenure (Q2 '16 - Q4 '17)
P&G Peers
(1)
Clorox 4.0%
Church & Dwight 3.6%
Henkel 2.7%
Kimberly-Clark 2.1%
Unilever 1.4% 117%
P&G 1.1% 116%
(2)
Colgate-Palmolive 0.6%
Peer Average ex. P&G 2.4%
Note: Reckitt Benckiser, Edgewell, L’Oreal, and 112%
Beiersdorf do not disclose volumes publicly P&G under-
110% performed by
1,200bps
107%
105%
103%
105%
104%
100% 103%
102%
100%
2011 2012 2013 2014 2015 2016 2017
Source: SEC filings and annual reports.
Note: Excludes Reckitt Benckiser, Edgewell Personal Care, L’Oreal Consumer Products and Beiersdorf Consumer due to lack of volume disclosure. For comparability Unilever figures represent volumes ex. the
Food segment; Henkel figures represent volumes ex. the Adhesives segment; Colgate-Palmolive figures represent volumes ex. the Pet segment; and Kimberly-Clark figures represent volumes ex. the
Professional segment.
(1) Clorox volumes adjusted to exclude impact from acquisitions and divestitures.
(2) Colgate-Palmolive “volume” is reported as volume and mix. - 22 -P&G is Losing Market Share at the Local Level Across Businesses
Market shares are down in 68% of the top 20 country-categories
Losing market share in each individual category on a global basis over the past 5 and 3 year
periods
Value Share Market Share Gain / (Loss)
Baby, Feminine & Fabric & Beauty, Grooming &
Retail Family Care Home Care Health Care
Country Sales ($b) % Sales 5 Yr 3 Yr 5 Yr 3 Yr 5 Yr 3 Yr
USA $29,504 34% (0.1%) 0.3% 0.2% 0.0% (2.6%) (1.6%)
China $8,789 10% (0.8%) (1.7%) (0.4%) (0.2%) (3.6%) (2.6%)
United Kingdom $3,815 4% 0.9% 0.8% (2.6%) (1.7%) (0.9%) (1.0%)
Japan $3,762 4% (0.1%) (0.0%) 5.1% 2.7% 0.1% 0.1%
Canada $2,703 3% 0.1% 0.2% 2.7% 0.6% (0.9%) (0.9%)
Germany $2,572 3% (0.9%) (0.3%) (1.0%) (0.6%) (0.9%) (1.2%)
Brazil $2,530 3% 0.4% (0.6%) (0.2%) (1.6%) 0.5% 0.2%
Russia $2,231 3% (2.9%) (2.3%) (6.6%) (6.9%) (0.9%) (0.5%)
Italy $2,115 2% (0.0%) (0.3%) (0.4%) 0.2% (0.8%) (0.5%)
France $2,077 2% (1.0%) (2.3%) (0.1%) (0.1%) (0.1%) (0.0%)
Spain $1,672 2% (2.5%) (1.1%) (0.8%) (0.6%) (0.2%) (0.3%)
Mexico $1,632 2% (4.4%) (4.1%) 0.0% 0.2% (0.3%) (0.4%)
India $1,414 2% (1.8%) (3.7%) (0.4%) (0.2%) (0.9%) (0.6%)
Philippines $1,169 1% (1.2%) 0.2% 1.7% 1.3% 0.1% (0.2%)
Argentina $1,088 1% (1.8%) (0.9%) 3.0% 0.2% 0.6% 0.4%
Turkey $1,072 1% 1.9% (1.0%) 1.6% 1.5% (1.1%) (0.8%)
Saudi Arabia $1,002 1% (2.0%) (2.4%) (7.3%) (1.2%) 0.2% 0.3%
Poland $823 1% (4.2%) (2.6%) 3.0% 1.0% (1.6%) (0.6%)
Egypt $644 1% 2.2% (0.3%) (4.0%) (3.9%) (0.1%) 0.4%
South Korea $579 1% (0.6%) (0.2%) 3.5% 1.0% (1.0%) (0.5%) Total P&G
Global P&G $86,557 (0.5%) (0.5%) (0.0%) (0.2%) (1.7%) (1.2%) 5 Yr 3 Yr
Country-Category Pairs Losing Share 15 16 11 10 15 15 41 41
Total # of Country-Category Pairs 20 20 20 20 20 20 60 60
% Losing Share 75% 80% 55% 50% 75% 75% 68% 68%
Source: Euromonitor International Limited 2017 © and Consumer Edge research. All rights reserved. The incorporated Euromonitor data has been independently researched as part of its
annual Passport research process. Euromonitor makes no representations about the suitability of this data for investment decisions. “Baby, Feminine & Family Care” measures P&G’s
market share trends in Euromonitor’s “Tissue & Hygiene” category. “Fabric & Home Care” measures P&G’s market share trends in Euromonitor’s “Home Care” category. “Beauty,
Grooming & Health Care” measures P&G’s market share trends in Euromonitor’s “Beauty & Personal Care” category.
Note: Figures highlighted in red indicate market share loss.
- 23 -P&G’s Operating Results Have Underperformed Peers
P&G’s income statement has stalled since 2011, underperforming the peer average on virtually
every line item including: sales growth (volume and organic growth), gross profit growth, gross
margins, operating profit growth, operating margins and EPS growth
P&G Income Statement (Continuing Operations) vs. Peers
Peer Average
($ in bn) 2011 2012 2013 2014 2015 2016 2017 CAGR CAGR
Net Sales $70.5 $73.1 $73.9 $74.4 $70.7 $65.3 $65.1 (1.3%) 2.6%
Volume Growth 0% 2% 3% (1%) (1%) 2% 0.8% 2.9%
Organic Growth 3% 3% 3% 2% 1% 2% 2.3% 3.7%
Core Gross Profit $35.1 $35.4 $36.1 $35.7 $34.2 $33.0 $33.0 (1.0%) 3.4%
% Margin 49.8% 48.4% 48.8% 47.9% 48.4% 50.6% 50.8% 90 bps 190 bps
Core SG&A $21.0 $21.4 $21.7 $21.0 $20.3 $19.0 $18.7 (1.9%) 2.0%
% Net Sales 29.7% 29.2% 29.4% 28.2% 28.8% 29.0% 28.7% (110)bps (130)bps
Core Operating Profit $14.1 $14.0 $14.3 $14.7 $13.9 $14.0 $14.4 0.2% 5.9%
% Margin 20.1% 19.2% 19.4% 19.7% 19.6% 21.5% 22.1% 200 bps 330 bps
Net Income $10.4 $10.1 $10.7 $11.2 $10.8 $10.4 $10.7 0.5% --
Shares 3,002 2,941 2,931 2,905 2,884 2,844 2,740 (1.5%) --
Core EPS $3.48 $3.45 $3.65 $3.85 $3.76 $3.67 $3.92 2.0% 7.4%
(1)
Core EPS (as Reported) $3.95 $3.85 $4.05 $4.22 $4.02 $3.67 $3.92 (0.1%) 7.4%
Most comparable across time frames
(see page 18 for more detail)
Source: SEC filings and annual reports.
Note: Financials exclude one-time costs such as restructuring expenses, impairments, non-recurring legal expenses, etc.
(1) Core EPS (as Reported) represents P&G’s Core adjusted earnings per share as originally reported for each respective year. This allows for true comparability to 2017 Core EPS,
as much of P&G’s EPS growth on a continuing operations basis since 2011 has been offset by loss of earnings from divested businesses that are backed out of historical results. - 24 -Competitors Have Grown EPS Faster than P&G
P&G largely blames volatility in the currency markets for poor financial performance but it is
not the only CPG company with adverse currency exposure
In fact two peers, Colgate-Palmolive and Kimberly-Clark, have grown EPS at a much faster
rate than P&G despite having more significant currency headwinds
EPS Growth: FY 2011 – FY 2017
88%
78%
73%
63%
56%
51%
43%
36% 36%
18%
(1%)
HE CHD BE OR RB. ULVR EPC KMB CLX CL PG
Cumulative
FX Impact (6%) (6%) (4%) 3% (2%) (8%) (10%) (19%) (9%) (29%) (18%)
on Sales:(1)
Source: SEC filings and annual reports.
Note: Peer EPS figures adjusted for non-recurring items and stock splits. EPS figures have been adjusted to reflect spin-offs, where applicable.
(1) Reflects cumulative FX impact to revenue growth from FY 2011 – FY 2017. - 25 -P&G’s Dividend Suffered as Revenue and Earnings Growth Stalled
P&G’s dividend per share growth is near worst in class as growth has stalled over the last few years
At the same time, EPS growth has been flat, resulting in a payout ratio that is the highest in the industry
We are not suggesting that P&G cut its dividend. Rather, it is imperative that P&G returns to consistent
market share growth to support healthy earnings and dividend growth in the future
P&G Dividend Per Share Growth Has Stalled While Payout Ratio Has Increased…
Growth has stalled…
$2.66 $2.70
$2.59
$2.45
$2.29
$2.14
$1.97
2011 2012 2013 2014 2015 2016 2017
Payout
50% 56% 57% 58% 64% 72% 69%
Ratio
Dividend Per Share Growth (Change over Last 6 Fiscal Years)
344% Peer Average: 98%
125% Peer Median: 54%
83%
56% 53% 47% 39% 37% 33%
CHD HE LC UL CL CLX KMB PG RB
Current 69%
40% 30% 51% 68% 55% 61% 59% 45%
Payout Ratio
Change in +5ppt +6ppt
+23ppt +8ppt +13ppt +5ppt +3ppt +19ppt -5ppt
Payout Ratio
Source: SEC filings and annual reports. Note: Edgewell Personal Care excluded due to the fact that dividends were not paid until 2012 and dividend policy materially changed
after the Energizer Holdings spin-off. Beiersdorf excluded as the company has paid a flat €0.70 dividend since 2011. - 26 -P&G Has Lowered the Bar for Performance Over Time
Despite promises of transformational change, improved organizational design, and large
headline cost savings meant to fuel reinvestment and earnings growth, P&G has generally
lowered the bar for performance over the past decade
Organic Sales Growth Target EPS Growth Target
Latest 3-year target of Double-digit
4-6% organic 2.8% organic growth was EPS growth
set lower than expected
market growth of 3-4% High-single-
Global market digit to low-
for P&G categories(1)
growth PLUS double-digit
1 to 2%
“Ahead” of
High-single-
global market
digit
growth
Mid-single-
2% organic digit
2005 L-T 2011 L-T 2014 L-T 2017 2005 L-T 2011 L-T 2014 L-T 2017
Target Target Target Guidance Target Target Target Guidance
“Why do you only expect 2% to 3% organic sales growth in fiscal '18? And does that really signal that
the ultimate payoff from all these areas is unlikely to move P&G above that 2% to 3% range longer
term? I guess, to put it simply, [is P&G] now a structurally lower top line growth company, more
in that 2% to 3% range?”
– Dara Mohsenian, Morgan Stanley Analyst, 7/27/2017
Source: Company filings, presentations, and investor calls.
(1) Expected market growth for P&G categories per P&G management (3-3.5% as of November 2016 Analyst Day near the time targets were set) and recent Wall Street research (~4%).- 27 -Big Picture: P&G Investments Have Not Generated Returns For Many Years
Since 2011, P&G has invested ~$96bn in R&D, advertising and promotion (“A&P”) and capital expenditures
(“capex”), yet volumes have increased less than 1% annually and market share is down
P&G’s cumulative investment is larger than the market value of most of its competitors, including Henkel,
Kimberly-Clark, Colgate-Palmolive, Reckitt Benckiser, Church & Dwight, Clorox and Edgewell Personal Care
Something is broken in P&G’s “innovation, marketing and growth machine”
We are not telling P&G to stop investing; we are suggesting actionable ideas to ensure future investments
drive an adequate return
Invested Capital Since FY 2011
~$96bn of total incremental invested capital since FY 2011
$16.6bn $17.0bn $16.6bn
$15.7bn Market share
$1.9 $1.9 $1.9 $15.0bn $15.0bn losses
$2.0
$1.9 $1.9
$4.0 $4.0 $3.8 Operating
$3.7 $3.3 $3.4 profit flat
EPS flat
$10.8 $11.1 $10.8 $10.0 $9.9 $9.7
2012 2013 2014 2015 2016 2017
(1)
A&P Capex R&D
Source: Company SEC filings.
Note: Company financials have been adjusted to exclude recent divestitures.
(1) Assumes promotion expense of 4% of net sales. - 28 -Revitalize P&G – Together
I. A Record of Underperformance
II. Trian Strategic Initiatives: Regain Lost Market Share
a. Organize in Way That Promotes Accountability
b. Ensure Management’s $12-$13bn “Productivity Plan” Delivers Results
c. Fix The Innovation Machine
d. Develop Small, Mid-Size & Local Brands
e. Make M&A a Growth Strategy and a Core Competency
f. Win in Digital
g. Address Insular Culture
h. Improve Corporate Governance
III. Appendix: Trian Overview
- 29 -Trian Strategic Initiative: Organize in a Way That Promotes Accountability
We believe P&G’s current “matrix” structure results in limited accountability
– Selling & Market Operations (SMOs) sit outside the Global Business Units (GBUs), creating three dimensions to
P&G’s matrix structure – GBUs, SMOs and Corporate Functions / Global Business Services (GBS)
– Corporate Functions and GBS report to Corporate, not the GBUs; resources within those organizations often have
dual-line reporting
We believe management overstates changes to the structure when suggesting P&G is now “End-to-End”
– GBU leaders are allocated significant costs from corporate, diminishing “End-to-End” accountability
– If GBUs truly “control” the sales force as P&G suggests, which GBUs do the following executive officers named
in P&G’s 2017 Annual Report report to?:
o Carolyn Tastad – President of North America SMO o Matthew Price – President of Greater China SMO
o Gary Coombe – President of Europe SMO o Mohamed Samir – President of India, Middle East, and Africa SMO
o Juan Fernando Posada – President of Latin America SMO o Magesvaran Suranjan – President of Asia Pacific SMO
– If sales resources report “hard-line” into GBUs then why do SMO Presidents and SMOs themselves exist?
– If they do not report into GBUs or there is “dual-line” reporting, then there is not “End-to-End” accountability
– Given limited transparency and public disclosure on P&G’s matrix structure, it is impossible to know what reality is
from the outside (this is another reason why we are seeking a seat on the Board for Nelson Peltz)
– What we do know is that market share losses continue. Moreover, extensive due diligence and unsolicited feedback
from recently retired P&G executives suggest changes are “incremental” at best:
“PG is working on how to fine tune the Modus Operandi to create ‘more End to End’ that in reality is still a highly matrixed
operation with plenty of shared services and shared accountability. This leads to a very long time for decisions to be made
as many people need to input… Several people at the General Manager level have confirmed to me that while there is a
push for change it all feels in reality ‘business as usual’” – Recently Retired GBU President, July 2017
Source: Company filings and transcripts; recently retired P&G executives. - 30 -Organize in a Way That Promotes Accountability (Cont’d)
We believe P&G should organize into a lean holding company with 3 largely autonomous GBUs
1) Beauty, Grooming, & Health Care ($26bn revenue)
2) Fabric & Home Care ($21bn revenue)
3) Baby, Feminine & Family Care ($18bn revenue)
– Strategy: Run like a series of smaller, connected companies to be faster moving and more locally adept
– Each GBU will have regional leaders with full P&L ownership including sales, marketing, manufacturing,
distribution & logistics, G&A (excl. shared services), etc. Oversight at GBU level that includes global brand
management and R&D
– Lean holding company (“HoldCo”) corporate staff
– CEO oversees 3 GBU Presidents to ensure best-practices cross-GBU
– HoldCo controls public company functions and costs
– Back-office / shared services that are agreed to by GBU leaders
A lean holding company structure with 3 GBUs will lead to faster growth by:
– Creating accountability: Each GBU President will have full and clear control of the entire P&L
– Reducing operational complexity: Allows P&G to operate as three smaller, more focused businesses while
preserving appropriate and logical synergies
– Faster decision making: Speed and agility is not a luxury, but a matter of survival
– Leaner cost structure: Empowers the GBUs by placing more resource decisions within the businesses
– Understanding of local trends: Consumer preference is increasingly fragmented and local; must be served
in culturally relevant ways
- 31 -P&G’s Existing Structure = Suffocating Bureaucracy and Complexity
(1)
P&G’s current organizational structure is highly matrixed with 3 power centers:
1. 10 GBUs (Categories): Global, Regional and Country
2. 6 SMOs (Sales & Market Operations): Regional and Country Report to Corporate, not the
GBUs; resources within these
organizations often have dual-line
3. Corporate Functions & GBS: Global, Regional & Country reporting
The structure relies on a web of “straight line / dotted line” reporting relationships that obfuscates
“ownership” of decisions and reduces organizational agility, exacerbated by the fact there are
three dimensions to the matrix between Category, Sales and Functions – from global, to regional,
to country
P&G’s Current Organizational Structure (Simplified So It Fits on a Page)
Note: Dotted lines represent what are
often dual-reporting lines in a matrix
structure
Primary Power Center
P&G Is Global Category
Global Sales Global Categories, Global Functions
Officer GBUs (10) (~8+)
Regional Regional Regional
Sales, SMOs (6) BUs (10x6) Functions (8x6x10)
Country Country Country Functions
SMOs (~90)(2) BUs (Up to 10x90)(2) (Up to 8x90x10) (2)
(1) GBUs are defined by category (i.e., Hair Care, Skin and Personal Care, Grooming, Oral Care, Personal Health Care, Fabric Care, Home Care, Baby Care, Feminine Care, Family Care).
Selling and Market Operations are responsible for sales execution at a regional and local level.
Corporate Functions include activities such as human resources, strategy, finance and IT, among others, and were created to support the businesses and create efficiencies.
(2) P&G sells to more than 180 countries according to P&G’s 2017 Annual Report on Form 10-K. Given the numbers of countries where P&G management operates on-the-ground is not public, we
estimate half for simplicity. - 32 -You can also read
